Overseas investors have reduced their exposure to Indian capital markets amid taxation worries and have pulled out over Rs 12,000 crore from it so far this month.

During January to April, investments by Foreign Portfolio Investors (FPIs) totalled Rs 94,241 crore, but a month-on-month analysis shows the fund flows are witnessing a declining trend.

FPI investments in January 2015 stood at Rs 33,688 crore, before dropping to Rs 24,564 crore (February), Rs 20,723 crore (March) and Rs 15,266 crore (April).

Things got worse in May as FPIs have withdrawn an estimated Rs 12,256.21 crore so far this month, according to the latest data from depositories and stock exchanges.

The huge sell-off comes on apprehension that the Government would impose a 20 per cent Minimum Alternate Tax (MAT) on profits earned by overseas investors.

“FIIs continued to lighten their weight in Indian equities,” Reliance Securities Head of Research Hitesh Agrawal said.

Meanwhile, expressing concerns over FPIs facing MAT demand, global rating agency Fitch has said the controversy may prompt FPIs to think twice before investing in India.

The Income Tax Department has already issued notices to 68 FIIs totaling Rs 602 crore over non—payment of MAT.

Some foreign investors have gone to court while the government has decided to set up a high—level committee to resolve the issue.

Since January 2015, overseas investors have invested a net amount of Rs 94,241 crore in the Indian capital markets (equity and debt).

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